The morning news. [volume] (Savannah, Ga.) 1887-1900, 1887-12-31
AN UNDESIRABLE PLAN.


States should not be subjected. In the bills
submitted herewith, the payments to be
nade by the respective companies are
fixed by the semi-annual amount of
interest accr-uing Oh their bonds, which is
directed to be paid annually into the sink
ing fund. In the event of refusal on the
part of the companies to accept the terms
offered TO them by these bills the commits
sion has found it impossible to substitute
for the present system a method of fixed
payment, however earnestly desiring to
do So" After saying that the history
of the Union Pacific railway
will show that its assets have been in former
years largely misapplied, ond that its finan,
cial ability to meet its just obligations has
been largely impaired by the action of men
who lGld fiduciary relations to the corpora
ton, but that under the decision of the
United States Supreme Court the United
States stands to these companle: only
in the relation of an ordinary creditor, and
until the debt is due cannot initiate legal
proceedings looking to greater security or
ultimate payment of its claim, the report
says: 1--WE have, therefore, inserted in the
bill which we recommend a section requir-
ing the Union Pacific Railway Company, III
accepting the terms of adjustment offered,
to consent that as to all causes of action
existing or to exist against any
the company for any cause whatsoever, the
company shall, ON application of the De-
partment of Justice of the United States,
bring any suit or take any proceedings that
shall be directed by that Department and
prosecute such suit or proceedings, under
its direction, to final consummation.
COMBINED MILEAGE.
The mileage of the Central Pacific and
Western Pacific (being that part of the Gen.
tral Pacific system covered by the bonded
lfen) is stated at 737 miles, and its branches
exempt from lien) at 1877 miles. The entire
system is now leased to Kentucky cor
poration known as the Southern Pacific
Company. Its value is estimated at $ll0,-
100000, but the commission believe this
valuation excessive, and that it could be
duplicated for $50, 900. The total funded
debt Of the system is S57 100000, exclusive
of the obligation to the United States. The
ultimate debt to the United States is little
more than $71, ,000,00 The same consider
ations which have influenced the action
of the committee in regard to
the Union Pacific apply to
the Central Pacific. 1t is equally desirable
to substitute for the percentage system the
payment of fixed sums, but, says the re-
port: "The application of the remedy to
the Central Pacific Railway Company is a
difficult task. 1t is hardly to be expected
that any act resembling the act submitted
in the case of the Union Pacific Railway
Company will be accepted by the Central
Pacific Railway Company.
DON'T EARN THE INTEREST.
"On the other hand, in the event Of re-
fusal to accept the application of the entire
net earnings resulting from that por-
tion of the road, in considera-
ton of which bonds were issued, is in
sufficient to meet the accruing interest
paid and to be paid by the United ST tes,
it is also insufficient to accomplish the re-
payment of the present worth of the obli-
CATION, even at the reduced rate of 3 per
cent. per annum, for the reason that the
entire net earnings will not amount to 3
per cent. of the present value of the debt
An enforcement of its statutory lien, either
at the maturity of the debt or an earlier
period, if the debt, or any portion of the
same, could be made to mature before the
date now fixed by law, would result in q
sale at which it could hardly be expected
that any bid in excess of the amount due
on the first mortgage bonds would be
made.
WOULDN'T BID HIGH.
",The Union Pacific railway now extend
ing their roads westward, might become
competitors, but it is not to be supposed
erty, in addition to the amount of the first
mortgage debt a sum in any way approxi-
mating the amount due the government.
The probable result would be. as
in the case of compulsory sale of the
Union Pacific railway, that the indebted
corporation, or some of its prominent
officers, acting In their own behalf, would
acquire the title to this road; so that the
ultimate effect would lie merely presenting
- - -
the whole amount due tol the
United States We herewith submit
a bin applicable TO the Central Pacific
Railroad Company prepared on thessame
principle applicable to the Union Pacific
Railroad Company, except that in the event
of refusal to accept its provisions tile en-
tire net earnings of the subsidized portion
of the road shall be applied to the sitiAng
fund and interest account ss dire ctel by
the Thurman act. The financial
inability of the company to meet these re-
quirements is the result, as before stated
of prohigate and wanton dispersion of the
assets of the company in dividends. the ag-
gregate amount of which exceeded
S34 600, and extravagant contgacts,
persisted in to the present time, as eyi-
denced IN the case of construction con-
tracts for the northerly end Of the Califor-
mia and Oregon railroad, by the Pacific im-
provement Company, entered into October,
1886"
LITTLE SPACE GIVEN OTHER RoADSa
Comparatively little space is devoted 10
the other railroads, whose affairs were h.
vestigatod by the commission. They share
in the condemnation of the methods of thar
builders and managers which is bestowed
in the cases of the Union and Centra
Pacific, and appropriate legislation for each
of them is recommended.
In discussing the question of legislation.
looking TO the adjustment OF the relations
between the Pacific railway companies and
the government, the commission declares
that in its Judgment il would have been inn
possible to have enforced the provision
which was contained in all the bills pending
in the Forty-ninth Congress, calling
for immediate maturity of the
entire demand of the United States,
in the event of any default in the payment
of any of the installlnents provided for.
The contemplated provision requiring the
companies to agree to institute, ON demand
of the Department Of Justice, all such suits
and proceedings as may be required by it
to be brought against any officers or
agents against whom misappropIation OF
assets or other cause of action is or may
hereafter be alleged, seems in the opinion
of the commission, to be the only practica-
BILE remedy for violation of duty which it is
believed has occurred
THE CONCLUSION REACHED.
After some general observations upon the
financial operations of bond aided roads, the
conclusion is reached by this commission,
based on their own examinations of the Off
,a,a- of tho raanact1va commands. tnnO ax-